P2P lending Europe – Here’s all you need to know


The P2P lending platforms below are for me trustworthy and good investment opportunities. I invest in several Peer to Peer lending platforms from Europe to diversify and earn passive income.

Learn more about this investment opportunity, returns, risks,  cashback, promotion, pros, and cons.


P2P lending Europe – Compare platforms 2019

Mintos
5/5
  • Expected interest rate: 11-13%
  • Min. investment: € 10
  • Buyback guarantee: Yes
  • Started: 2015
  • Loan types: Personal, Car, Mortgage, Business, Invoice financing, Agricultural

Cashback

 

5/5
  • Expected interest rate: 11-13%
  • Min. investment: € 10
  • Buyback guarantee: Yes – On the whole platform
  • Started: 2017
  • Loan types: Mostly short term and personal loans
Fast Invest
5/5
  • Expected interest rate: 13%
  • Min. investment: € 1
  • Buyback guarantee: Yes – On the whole platform
  • Started: 2015
  • Loan types: Consumer based loans
Grupeer
5/5
  • Expected interest rate: 13-15%
  • Min. investment: € 10
  • Buyback guarantee: Yes - The whole platform
  • Started: 2017
  • Loan types: Personal, Car, Mortgage, Business, Development projects
DoFinance
4.5/5
  • Expected interest rate: 12%
  • Min. investment: € 10
  • Buyback guarantee: Yes - On the whole platform​
  • Started: 2017
  • Loan types: Consumer based loans (short term)
viainvest
4/5
  • Expected interest rate: 11-12%
  • Min. investment: € 10
  • Buyback guarantee: Yes - On the whole platform​​
  • Started: 2016
  • Loan types: Consumer based loans

Where should I make my first investment?

 

Personally, I started at Mintos back in October 2017 and I have an average interest rate is around 13%. I think actually most people start here 🙂

If you use the link to the site on this page they also give back 1% extra in return on your first investment.

I have never regretted because they have an incredibly well-functioning platform. Mintos has the largest market size within P2P lending Europe and they are very safe and reliable to use.


Here is a quick overview of their marketplace:

 

Peer to peer lending marketplace


To use this platform you must be 18 years old and you can invest from most of the world.

You can transfer money to the platform account from your bank or e-money account.


If you have money in a currency other than Euro (EUR)
I strongly recommend using 
Transferwise to exchange currencies because then you have more loans to invest in. Transferwise has no hidden fees but a low transfer fee (usually 0.35%-1%).

I use it every time and it’s safe. You can actually also open a European bank account for free at Transferwise.

 

💡 You can be inspired by My Investment Portfolio. I update my progress every month with news, returns, strategy, risks, etc.

 

What is P2P lending from a European perspective?

 

What is p2p lending?

 

Peer to peer lending is also called P2P lending or crowdlending.

It’s a very fast-growing investment opportunity with many good platforms for lending your money to individuals. 


It’s one of my favorite investment opportunities and a big part of 
my investment portfolio.

The first company within P2P lending Europe is called Zopa. They started back in 2005 but they only offer 4-5% in return, so I do not recommend them as there are far better options today.

Ever since has the peer to peer market in Europe developed into a very serious, safe and regulated asset class. 

Today there are many platforms within P2P lending Europe but actually also worldwide.  

 

You can now easily lend out money directly to the borrower and earn interest. You do it without the use of a traditional bank as an intermediary (middleman) but directly on the regulated platforms 🙂

 

Peer to peer (P2P) loans

 

peer to peer lending loans

 

The loans are typically pre-funded from the loan originator on the platform (within P2P lending Europe) and usually, they also have minimum 5-10% skin in the game (invested into the loan).

You lend money to borrowers at a fixed interest rate and receives ongoing repayments including interest.


The specific type of loans the platforms offer is shown in the overview at the top. There is a large variety of loans and it makes it possible for you to diversify your investment portfolio. 


Typical P2P loans

 

  • Mortgage
  • Car loans
  • Invoice financing
  • Business loans
  • Consumer loans
  • Personal loans
  • Agricultural loans
  • Development Projects


I prefer to invest in mortgages, car loans, consumer loans, and personal loans. 

You can set specific criteria

 

Customizing is always an option and it’s perfect in relation to your investment profile, diversification, and above all minimization of risks

You can choose specific criteria like: 

  • Currencies
  • Loan types (Car, Business, Personal, Mortgage, Short-term, etc.)
  • Countries
  • Loan originators
  • Loan originators ratings
  • Buyback guarantee
  • Status of the loans
  • Interest rates
  • Loan term

If you take a closer look at the individual platforms here on my blog, you can see my setup on each platform.

Buyback guarantee minimize risks


I always use a buyback guarantee in every single loan to reduce risks.

Even though I may get a higher interest rate, I do not think it’s worth the risk.

Don’t feel tempted because there is a connection between your return and the risk!

Loans that default (the borrower don’t pay)  will be repaid to you typical after 30 – 60 days. You have a high level of security in your investments with this guarantee.

I actually still haven’t experienced that one of my loans were not repaid and I have been investing in P2P lending since October 2017 😎

Auto invest – function makes it really easy


Most (if not all) platforms also provide an auto-invest function, so you don’t need to use too much time on investing in new loans.

 

Auto invest strategy



You can choose specific criteria that fit your investment profile and you can even choose portfolio size.

You can also on many platforms choose an automatic investment with pre-made strategies.


The platforms automatically select loans for you every day within your specific criteria. It’s a really great feature and I use it all the time.

Remember, however, to follow up on your auto investment setup sometimes. I do it monthly.

P2P lending returns

 

Annual interest rates are typically around 10-15%, but you may also find loans with interest rates that are up to 17-20% (However, they are often without a buy-back guarantee).


Most often you can’t withdraw your money from any the loan agreement and I think it’s a good idea to have a long-term perspective on this investment. 

You can also invest in short term loans if you want to invest for a short period. However, I personally do not want a specific loan type exclusively.

Another thing worth mentioning is compounding:

Compound interest is a really powerful tool to create more passive income. Below I made a great example with returns of € 1000 with 13% annual interest rate in 5 years 😎

 

Peer to peer lending returns

P2P lending market size and growth 
(especially in Europe)

 

peer to peer market size

 

The peer to peer market is developing rapidly and has incredibly strong growth in size. It’s very promising.

It’s among the fastest growing segment in the financial lending market. Just in 2015, the market size in Europe grew by 92% (€ 5.4 billion) according to a survey by the Cambridge Centre for Alternative Finance.

Several different research (like Transparency Market Research) is projecting an increase to one trillion U.S. dollars by 2025 worldwide. Furthermore, Morgan Stanley (US bank) has predicted that P2P lending will reach $490Bn in 2020.

 

P2P lending Europe


The forecasts above provide a good insight into this fantastic investment opportunity currently available within P2P lending Europe.

The European market is still in its infancy as an asset class and I think we will have a lot more P2P marketplaces to use within the next few years.

In China, there are already 4000 P2P lending companies operating on their market (It’s the biggest market but still a crazy big number). If we compare with 2011, the number was only 50 in China.

It’s also fast-growing in India and the Southeast Asia regions.

Pros and Cons of P2P lending

 

Below I have listed some pros and cons to consider.

Pros

 

  • Stable and predictable returns
  • Lower risks using buyback guarantee
  • Higher yield than most investments (high interests)
  • Easy to handle and understand
  • Great asset class for diversification
  • High control of the investment 
  • Auto invest with little time involved
  • Low barriers to entry (1 EUR minimum, no fees)
  • Current trends and future estimates are very promising 
  • Lending directly to peers (borrower) is like helping  people out

Cons

 

  • Sometimes less liquidity than stocks, index funds or bonds because of long time horizons
  • Not secured by any government guarantee
  • The asset class haven’t been around for a long time (since 2005 in Europe)

💡 Read more in-depth about the advantages and disadvantages in P2P lending

 

P2P lending reviews


You can follow my personal experiences with peer to peer lending here on my blog. I update every single month with the progress, cashback, special promotions, returns, news, my investment strategies, etc.


Right now I invest in Mintos, PeerBerry, Grupeer and Fast Invest.

➀ Mintos review

➁ PeerBerry review

➂ Grupeer review

➃ Fast Invest review

➄ DoFinance review

Viainvest review

Lenndy review

P2P lending FAQ (Frequently asked questions)


Is there any promotion code or cashback program?


Yes. You can get 1% extra in return on your first investment at
Mintos

You can also get 10 EUR at Lenndy.

The money will be paid within a very short time on your platform account.

 

Can anyone create an account on the various P2P lending sites?


Yes if you are 18 years or older. Some platforms also require a picture of your personal identification document (ID).  This can be a government-issued ID or scan of your passport.

 

Can I trust the platforms? Are they safe to use?


Yes (In my opinion). They use risk mitigation policies and loan originators are regulated.

However, you shouldn’t invest only in p2p lending. You can read my blog post about how I manage my investment portfolio to minimize risks. You can also read more about how, for example. Mintos protects its investors

 

How do I pay tax on my returns?


Depending on where you live, local authorities have their own tax system. You should either get local advice or contact the authorities. On the various peer to peer lending platforms, you can also get tax reports. You can use it to report your returns.

 

Are there any platforms that you don’t recommend?


I personally never invest without a buyback guarantee. Some platforms, unfortunately, don’t have this option at all and I think the risk is too high without. Platforms without this security are, for example. Bondora. 

In addition, I also look at their historical stats and other investors experiences.

That’s it. I hope you liked this topic about P2P lending Europe 🙂

Join the monthly 
Stay Focused Email List

and stay connected 🙂

  • Follow my journey and blog updates
  • Stay on track
  • Learn more during your own progress
 

 

Learn more about how to become financially free and 100% independent

Read more about me and this blog

Peter Michael

I'm an investor and the blogger behind My Investment Blog. I write about investment, financial independence, personal finance, and personal development. I try to combine the topics and show my journey towards financial freedom.

Recent Content

link to Anfängerleitfaden zu Investmentfonds

Anfängerleitfaden zu Investmentfonds

Generell wähle ich keine einzelnen Aktien aus, sondern nutze Investmentfonds. Wenn du anfängst beim Aktienmarkt zu investierenkann es schnell verwirrend werden. Glücklicherweise haben wir heutzutage einige gute Möglichkeiten. Investmentfonds machen so viel mehr Sinn wenn du die Möglichkeiten durchdacht hast. Vor allem der Zeitaufwand. Im Folgenden geht es im Besonderen um Indexfonds, da es meine […]